Oil and gas update Oct 07

Some news on the oil and gas sector play these two days.

CIMB

Hiap Seng Still cheap. HSE is trading at 10x CY08 P/E vs. peers 15x. We believe HSE
share-price weakness (-23% in the past 14 days) has discounted investors
concerns over delays and margin compression and presents another opportunity
to accumulate for the strong FPSO market outlook and heightened activities on
Jurong Island. Following our earnings reduction, our target price has been trimmed
to S$1.20 from S$1.25, still based on 15x CY08 earnings, in line with peers.

>> According to the SGX filing, one of the fund manager is pulling out. This contribute to the share price decline of Hiap Seng. At the current price, without any significant fundamental deteriotion, I would say it is a good buy.

Kim Eng

Swiber Holdings – Has stepped up its fleet expansion programme with the acquisition of four new vessels for US$108m. The marine group said that wholly owned subsidiary Kreuz Engineering has acquired two sub-sea support vessels and two deepwater anchor handling tug/supply (AHTS) vessels from Thaumas Marine. The purchase amount does not include the cost of equipment that Swiber will retrofit or purchase for the vessels. Swiber said that the acquisition of the vessels would extend its capabilities in sub-sea and deepwater activities. This would enable it to take on more offshore oil and gas projects and broaden its revenue streams. The company expects revenue synergies and growth potential from these acquisitions. The acquisition will be financed by proceeds raised from the successful completion of the group's recent bond offering and sale and leaseback arrangement.

>> Management continue to execute their expansion plan. It would be interesting to see what Swiber would become in the next two years. Looking at the current price, it is a bit pricey, waiting for share price weakness for accumulation.

Technics Oil & Gas – A wholly owned subsidiary has secured a contract worth $17m for two modules of gas compression systems and one unit of gas treatment and processing module.

>> An interesting oil and gas play beside Hiap Seng, there are many corporate development that support their push into the new growth market. Yet to access the management plan and future direction. But this could be a potential winner also.